Loss of 30 free hours will cost me £37,000 of pre-tax income

[ChildcareCost]

9 month olds are eligible for 30 free hours from September. If you earn over the threshold, you do not get this 30 free hours plus the £2,000 of tax-free childcare.

My nursery typically charges £2,150 a month for an under-3. This works out at c. £10 an hour assuming a 50 hour week (open 8-6).

They have circulated the free hours schedule this week, and the monthly cost with 30 free hours is £1,100 hours for an under-3 (noting funded hours only cover 38 weeks).

This means the loss of the 30 free hours will cost me £12,600 a year. Plus of course the loss of tax-free childcare at £2,000.

So, I need to earn an extra £14,600 net just to cover the cost of not being eligible for this scheme.

To earn that £14,600 over £100,000 – I need to earn a gross figure of £137,000.

Surely this is not fair on the parents excluded from the scheme? It doesn't seem proportional that I need to earn an extra £37,000 just to recoup the loss as a result of not being eligible!

Entitlement is usually if you haven’t contributed, the op is to a high level.

OP is hardly Jeff bezos…

I want social benefits to benefit me, the same as can be claimed by households earning up to £198,000 a year.

I pay very high rates of tax, which is why the sum I need to earn to recoup that loss is so high - at £37,000 over the threshold for £14,600 net pay.

@Dreamondreaminon - love what you did at the end of "Yes you also have different tax rates and other things you're not eligible to, but saying childcare costs aren't fair for you, while dismissing theyre still way more unfair for the rest of us is a bit rich."

You conveniently ignore the fact that the 40k earner is paying the lower sum out of salary attacking income tax at 20%. The higher earner is paying the larger amount out of salary that has 60% income tax taken from it in many cases.

12k paid by the lower earner needed 3k income tax to fund it.

18k from the higher earner needed to pay c25k income tax to generate the 18k (some at 60% some at 45%)

Net result for the same service is 15k salary from the former and 43k salary from the latter.

I’d say anyone earning 6 figures or above is a high earner

Haha thank you. I wanted to add pardon the pun, but thought, nah, let it live 😇

thats £11k extra income. Hardly pocket change. And almost the entire amount you’d need for the childcare.

You’re not making it sound better.

Au contraire…the entitlement of those who contribute very little but want others to pay increasing amounts to subside them are those that are staggering IMO. Why, when OP pays amongst the highest rates in the system should she be castigated for presuming that when she needs to access help to continue pay her high threshold of tax, she is told to work less or suck it up?

It’s defo impacted productivity. Now my husband is at £100k and then needs to salary sacrifice all his pension or anything he gets for going over and above or if he were to go for promotion, he just isn’t. In fact we live in the regions where men working part time isn’t really a thing but most of his posh school friends now only work 4 days to get under the thresholds!!!

Yep, this. If people genuinely look at these figures and think it’s fine, then they either don’t understand or it’s pure bitterness, nothing else. I believe in universal childcare, but failing that, it needs to be fairer than the above.

I am sure if you were facing an 80%+ tax rate on any additional income, you’d be perfectly content with it…

OP, I'm very curious...you have an salary of £160,000 and have spent the majority of today arguing your case for why you should be entitled to 30 hours free childcare...

What do you actually do to earn your £160,000 a year...?

If you can’t afford childcare don’t have children! Isn’t that what they say!

sorry my 21k pa heart doesn’t bleed for you at all! You earn 4 times my household you can afford to pay £2k a month childcare and shouldn’t be subsided!

Then tax needs to go up to include a 50% tax threshold and possible a 60% tax threshold, thats if you are prepared to give up around £10,000 of your income to receive benefits of around £3000

Good for you if thats the case

but I doubt it is - you'll not want the higher tax brackets of 47-62% in reality

You do realise people can work shifts, or have annual leave, or could be sick…. Or a a number of other things.

But that's a different point. The OP has been complaining that 95% of parents using childcare from September for 9+ mo will pay less than her in chilscare costs until the child is 3yo.
The other tax related things have got nothing to do with childcare costs, which hit everyone really hard, even when you have 15 or 30h for "free" (as I said, they're not 100% free and only cover 2 days a week).

but youre not facing an 80% tax bracket are you - you decided to have kids and now want to get the state to pay for them - if you couldn't afford them you shouldn't have had them 😋

We already have the brackets of 47%-62%…!

show me as I previously asked you to do

And it's not a 'loss' of childcare hours, very few ppl had 30h free from 9mo before this year. So was everybody losing all of that money before, and now it's only the OP losing it still?

People who work enough to be over the UC wage allowance "lose" a signifcant amount of each penny over that allowance too, because the UC is rediced.... because it's no longer needed.
The 100k cap was generous to ensure anybody over it wouldnt be left struggling. Until now people managed on much less while still paying childcare fees, or took the hit career wise.
You only have the same dilemma as them, but without worrying about putting food on the table.

No - the tax is exactly the point.

The loss of the free hours plus the tax rate mean the ‘return’ on earnings starts to get rather small vs the headline figure - as I already have an effective 100% rate between £100-137k.

Oh I understand this...I'm just curious what role OP works in that pulls in £160,000 a year more than anything else TBH